Stocks are marching higher again today as investors continue to cheer the Federal Reserve’s decision to hold interest rates steady — and as a weaker-than expected October jobs report has raised bets that the central bank is now done hiking interest rates.

The employment report showed that the economy added 150,000 net new positions in October, which was less than the 170,000 to 180,000 that economists and markets had forecast. The weaker jobs data is a sign that the U.S. economy may finally be slowing after remaining buoyant for most of the year. It also might mean that there is no further need to raise interest rates.

Signs the Economy Is Slowing

In addition to missing analyst expectations, the October jobs report showed a significant decline from the 297,000 jobs that were added this September. Consequently, the unemployment rate rose to 3.9%. That is its highest level since January 2022, per Kiplinger.

The biggest job losses during October were seen in manufacturing, which posted a loss of 35,000, mostly due to the recent strikes by automotive workers. Transportation and warehousing saw a decline of 12,100 jobs in the month as well, while information-related industries lost 9,000 positions.

A weakening labor market is a sign that the economy is slowing down and a key metric in the Fed’s interest rate decisions. Fed Chair Jerome Powell has said repeatedly that the central bank needs to see a significant slowdown in the labor market before it feels confident that rates are having their intended impact of both cooling the economy and lowering inflation.

Favorable Conditions

The weak October jobs report has futures traders and investors betting that we’ve now reached peak interest rates and that the trendsetting federal funds rate will not go any higher than its current range of between 5.25% and 5.50%. Markets now expect that interest rates will stay at their current peak level for about six months before the Fed begins lowering rates.

The soft jobs data has also led to a further decline in bond yields, with the benchmark 10-year Treasury pulling back to around 4.5%, down from above 5% at the end of October. This is all good news for stocks and has investors feeling more bullish about the market and the risk-reward of equities. With the Fed on the sidelines, the economy slowing and bond yields in retreat, conditions are suddenly more favorable.

What’s Next?

All the major U.S. stock indices are ending the week in the green, with the benchmark S&P 500 index up more than 5% over the past five trading sessions and on pace for its best weekly performance of the year. As the calendar has turned to November, it’s as if the storm clouds that have been dragging markets lower for three consecutive months have suddenly passed and the sun is shining again.

On the date of publication, Joel Baglole did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.